Statement of Cash Flows

• Cash provided by operating activities and free cash flow significantly above previous year

Cash provided by operating activities improved by €1,068 million year-on-year to €8,785 million in 2017. This was due to higher net income. In contrast with the previous year, the change in net working capital reduced cash flow. This was largely attributable to the higher level of cash tied up in inventories and trade accounts receivable for operational reasons. Miscellaneous items in 2017 mainly related to the adjustment of earnings contributions from investments accounted for using the equity method. In the previous year, this item primarily included the transfer of disposal gains to cash used in investing activities.

Cash used in investing activities amounted to €3,958 million in 2017 compared with €6,490 million in 2016. Payments made for property, plant and equipment and intangible assets amounted to €3,996 million, below both the prior-year figure (€4,145 million) and the level of amortization and depreciation of intangible assets, property, plant and equipment, and financial assets (€4,213 million).

Acquisitions and divestitures in 2017 resulted in net payments received of €27 million. In comparison, net payments of €2,164 million were made in 2016, primarily as a result of the acquisition of Chemetall.

The cash inflow from financial assets and other items in 2017 amounted to €11 million. In the previous year, the acquisition of marketable securities in particular led to net payments made of €181 million.

Cash provided by financing activities amounted to €394 million in 2017, compared with cash used in financing activities of €2,160 million in the previous year. Changes in financial liabilities resulted in a cash inflow of €3,248 million. This was mainly due to the issue of bonds with a volume of around €5 billion. The main offsetting factors were the scheduled repayment of four bonds and the scaling back of BASF SE’s U.S. dollar commercial paper program. In 2017, dividends of €2,755 million were paid to shareholders of BASF SE and €118 million to minority interests.

Cash and cash equivalents amounted to €6,495 million as of December 31, 2017. They rose by a cash-effective amount of €5,221 million in 2017, largely in preparation for payment of the purchase prices for the planned transactions with Bayer and Solvay.

Free cash flow represents the financial resources remaining after deducting payments made for property, plant and equipment and intangible assets from cash provided by operating activities. It rose to €4,789 million compared with €3,572 million in the previous year, primarily due to the increase in cash provided by operating activities.

Cash flow (billion €)

¹ Including investments to the extent that they already had an effect on cash